My wife just called from her car on the way to work. She heard on the radio that AA has announced 10 daily nonstops each way between LGA and BOS. I haven''t seen any confirmation on this.
If true, something should be out soon.
American aims big, thinks small in new air shuttle
Wednesday September 18, 5:17 pm ET
By Jon Herskovitz
DALLAS, Sept 18 (Reuters) - American Airlines has cut staff, cut flights and even looked to cut in-flight meals as it tries to cut into an avalanche of losses.
Beginning on Tuesday, the world's largest carrier will look to add a new shuttle flight service to the East Coast cities of Boston, New York and Washington as a way of boosting profits. American has lost more than $2 billion in the four quarters since the Sept. 11, 2001 attacks on the United States.
On the surface, the timing looks awful to start the new service with the industry still reeling from the aftereffects of the attacks. The two carriers currently operating shuttle service between the cities -- Delta and US Airways -- have seen about a 20 percent drop off in traffic in the first half of this year.
But American is banking on a strategy of using smaller and cheaper regional jets and tapping into a base of loyal American customers as a way of making the new service work.
We see this as the right-size aircraft for the right-sized market, said Lisa Bailey, a spokeswoman for regional jet carrier American Eagle, part of American's parent AMR Corp. (NYSE:AMR - News).
American Eagle will start service between Boston's Logan Airport and New York's LaGuardia Airport next Tuesday with 10 daily flights, using Embraer jets that seat either 37 or 44 passengers. The service will add a similar link between LaGuardia and Washington's Reagan National Airport a week later.
We needed to build American's presence on the East Coast, Bailey said. We know that there are American passengers and American Advantage frequent flier members who are out there in those markets who are selecting another product.
US Airways Group (Other OTC:UAWGQ.PK - News), which recently filed for federal bankruptcy protection, flies Airbus A320s that seat 150 passengers on its shuttle that runs 16 daily New York-Boston flights, 15 from New York to Washington and 14 between Boston and Washington.
Delta Air Lines (NYSEAL - News) uses Boeing 737-800 with a similar seating capacity and currently offers 17 daily flights between New York and Boston and another 15 New York-Washington flights.
LOWER COST SHUTTLE
Although Bailey would not disclose the cost of operation for a regional jet compared to a larger jet, she said RJs offer lower fuel and crew costs as well as cheaper landing fees because of their lighter weight.
This is a niche market where American thinks it can make money. In a sense, they are emulating the Southwest Airlines (NYSE:LUV - News) model by providing point to point service with high frequencies and lower operating costs, said Bernard Weinstein, a professor of applied economics at the University of North Texas and an airline analyst.
Weinstein said that American might also be looking to take traffic away from US Airways as it struggles through bankruptcy procedures and capture passengers from Amtrak's high-speed Acela train service, which has been plagued with operating problems.
Increased security at airports after the Sept. 11 attacks has helped Amtrak attract customers on the East Coast with travelers willing to jump on the train than go through the hassle factor of passing through the checks at airports, analysts said.
Delta and US Airways have special gates for shuttle passengers as well as offering discounts and frequent flier miles to passengers who spend more than 20 minutes at the gate.
American will be using its regular American Eagle gates for its shuttle passengers, who will find their quarters on the RJs a bit more cramped than the offerings on Delta and US Airways.
American said its prices on the shuttle will be competitive with its rivals. Round-trip tickets on next week's initial flights between Boston and New York - with travel on the same day - were $344 to $453 on American Air's Internet ticket site.
American will try to sweeten the pot by offering triple frequent flier miles through Dec. 31.
David Stempler, president of the Air Travelers Association, said that American has a strong core of customers in its American Advantage frequent flier program, which was one of the first in the business.
All things being equal in terms of price and schedule, frequent flier programs tend to be the tiebreaker in selecting a carrier, Stempler said.
Talk about kicking a guy when he is down. Looks like a direct attack against U. Its a plane eat plane world out there. I think AA next moves is to start discounting tickets forcing U & DAL to match. AA does have a cost advantage. DAL can afford it U cant. In todays market it is a bold move. Go get them AA!
On 9/18/2002 11:12:04 PM kirkpatrick wrote:
Thanks for posting that. I had heard some talk of this a few weeks ago, but had seen no confirmation. I wonder if the slots necessary are made possible by the TWA purchase?
You are welcome. What are you talking about TWA slots? You know that TWA didnt bring anything of value to AA. Of course thats where they are coming from. TWA had so many slots at LGA that they least a bunch of them to their competitors, DAL & U. A good question is did AA take them back or were they lost during bankrupcy?
Hope your trading business is doing well so you can afford to stay home with your family. It must be interesting to commute on old TWA routes on AA metel and crews. Now I hear AA is taking over international at STL too. Yet some say that if AA had not bought TWA there would not have been lay offs at AA. Just like saying there isnt going to be a war.
Again hope all is well with you and family. I hope to work with you sometime in the future. Seems like the future keeps getting farther away.
On 9/20/2002 2:39:25 PM michael707767 wrote:
Rots of Ruck
AA is competing against Delta's 737-700s and USAirway's A319/320s using ERJs. We're talking some SERIOUS customer loyaty here!
Delta flies the 737-800 on the Shuttle, not the -700.
Aloha A320 Driver,
Thats what AA is counting on. The biggest SERIOUS loyalty group in the world is AAs FF Program. Remember they started it. With triple miles thrown in and a much lower cost structure we will shall see what happens. Ruck' has nothing to do with it. DAL can take a hit, but can U?
On 9/20/2002 4:42:57 PM TWAFA007 wrote:
With triple miles thrown in and a much lower cost structure we will shall see what happens.
A much lower cost structure?!? How do you figure that? RJ unit costs are way above mainline equipment. They cost less on an absolute basis, but they carry even fewer seats. Considering that those routes are running at relatively low loads, maybe this is a case of rightsizing, but low cost, it ain't. I think this is a case of future market share poaching, rather than meeting the needs of the market. For sure, there are too many seats on this market already.